Editorial: Raise taxes, then raise salaries

2013-06-19 15:31:51

Gov. Jerry Brown and the state's Democratic leaders had warned that California taxpayers needed to pay additional income taxes and sales taxes to keep the state from heading over the fiscal cliff. Voters complied in November, approving an historic tax increase, and the governor now is rewarding the unions that helped him pass it.

As the Sacramento Bee reported recently, "California's largest public employee union and ... Brown reached a new labor agreement ... sending a strong signal that pay raises are possible to other unions bargaining contracts with the administration." The Service Employees International Union secured a 4.5 percent pay hike. It wasn't nearly as much as the union demanded, and, indeed, union officials protested at the Capitol.

But that raise is larger than many, if not most, private-sector employees in California can expect, and the agreement is evidence that the tax increases aren't preserving core services, but are merely helping the state get back to the pre-recession status quo. This pay raise will create the impetus for higher wages throughout state government, which also will boost the basis upon which pensions are calculated.

In fairness, the governor's budget is reasonable and more austere than some of the most-liberal interest groups had demanded, but he has failed to reform the state's debt dilemma. These agreed-to raises will not help the state keep a lid on spending, even though they begin in 2014 and are tied to the state hitting budgetary targets.

We don't argue that state workers never deserve raises, but their compensation packages already are generous, and the state faces an enormous unfunded liability – the taxpayer-backed debt to fulfill the many retirement promises made to government employees. David Crane, former Gov. Arnold Schwarzenegger's pension adviser, in a piece for Bloomberg News, noted that the tax increases are funding pensions more than they are education.

Public sector unions have had control of the Legislature for years, and these same unions have been Brown's most muscular political supporters. The new round of pay increases smacks of, as some Republicans noted, a thank-you gift to the unions.

Unless the state's voters say "no" to pleas for more money, no serious reform is likely. Within a $96 billion budget, a 4.5 percent raise for some employees isn't enormous, but it makes it even tougher for the government to contain its spending proclivities. Let's hope the voters learn a lesson here.